Category Archives: Money in Politics

In the past week, I had three conversations that all intersect on the issue of the future of the Democratic Party. Three quite different people, and varying subject matters. I have not yet reached a conclusion, but the questions raised fascinate me.

Conversation 1

I belong to a political action group and we had a meeting. While the topic doesn’t matter, this comment still rings in my ears: “I work in a factory, and we make decisions immediately. I hope the rest of you won’t take this wrong, but you are pencil pushers.”Continue Reading...

Party committees — whether it be the Democratic National Committee or your local county or township committee — serve three basic functions in politics. First, they try to find good candidates to run for office — preferably candidates that the committee views as having a strong chance at winning in the general election. This function can become controversial when other folks also want to run and people start complaining about the party trying to rig the race or stack the deck. Second, the party committees raise money. Particularly at the national level, where big money is involved, this function sometimes looks unseemly as both parties typically offer access to party leaders to big dollar donors. Finally, the parties decide what to do with the money they raise. Some of this money go to basic party building activities, paying for voter databases and committee staff that help all of the candidates. But, at both the state and national level, there is money to go for staff for field offices in certain states and certain areas of states and to spend on party sponsored ads. Similarly, the campaign of the presidential campaign also has money for staff and ads. The question for the party committees and the presidential campaign is where to put the staff and where to buy the ads. That question turns on conclusions about where the most bang can be gotten for the buck — which states are the battleground states, those with a close battle where the extra resources could potentially swing the election.

The state that gave voters Todd Akin in 2012 is back at it again. Missouri used to have campaign finance limits, but — when the Republicans held the Governor’s mansion between 2005 and 2008 — those limits went away. (There might be a proposed constitutional amendment on the ballot this fall to restore those limits. In recent years, policy proposals have tended to be constitutional amendments to avoid any legislative attempts to repeal voter-approved legislation such as the original campaign finance limits.) It is not unusual for one donor (actually one of two or three individuals) to give several hundred thousand dollars in seed money to a candidate. As a result, the pre-filing period sees a lot of candidates changing races in response to these well-funded candidates. Outside of the U.S. Senate race, each of the state-wide races (there are five state offices on the ballot) has a competitive primary on at least one side of the ballot.

Republicans like to describe Missouri as a state with two thorns in its sides. The two thorns being the St. Louis area and the Kansas City area; both of which tend to vote for the “liberal” side of any proposition or race, often overcoming a “conservative” majority in almost all of the remaining counties. This picture of Missouri tends to be reflected in the two primaries. On the Democratic side, there is often a battle between St. Louis and Kansas City, On the Republican side, it is often Springfield against the Kansas City and St. Louis exurbs. On to the individual races.

For all that is different about this year’s presidential race, the one that, for the most part, has been overlooked is that Trump is the head of a closely-held family business. For lawyers, there is a big difference in how we look at publicly traded companies and those that are privately held. If a company is publicly traded, it has to file SEC reports and answer to a diverse group of stockholders. While officers and directors can engage in self-dealing, there is a clear separateness between them and the corporation. When a company is owned by a single person or family, lawyers are more likely to take a very close look at whether the owners treat the corporation’s assets as their personal assets or if they maintain an appropriate degree of separation. In other words, we look at whether the corporation and the person are truly separate or whether the owner treats the business as his alter ego.

Everything that we have seen in this race so far tends to indicate that Donald Trump is the Trump Organization and that the Trump Organization is Donald Trump. Throughout the primary, Trump held a lot of events at Trump Organization properties (with Trump Organization products lavishly displayed), This week at the convention, we saw this overlap in the news reports on Melania’s speech. Aside from what the plagiarism says about Trump Organization business practices and what that say about how Trump would govern, the bigger concern is how the Trump Organization just delegated somebody to work on the speech. (Given that Trump is the owner of the Trump Organization, the campaign laws issues is easily managed. Trump just has the Organization give him a dividend which he contributes to the campaign and the campaign pays back to the Organization — a mere paper transaction that complies with the law.)

If, before the election, Trump sees the Organization as a tool to further his personal ambitions, what happens after the election? Traditionally, a president (or other politician)with significant holdings puts them into a blind trust. In theory, because the politician does not know what changes the trustee may make to the portfolio, this practice prevents them from making decisions to benefit their personal stock holdings (e.g., deciding to change weapons acquisitions from the army to the air force because they hold Boeing stock). With Trump, there is simply no conceivable way that Trump could divest himself of his holdings in the Trump Organization. More importantly, while Trump may step down from day-to-day management, the new CEO will be one of his children (and we have already seen the key role that his children play in advising him). The first time that Trump tries to play hardball with another foreign leader, the logical response will be for that foreign leader to start talking about what that country could do to help or hurt the Trump Organization. If Trump wants China to take a tougher stance on piracy of movies and software, China may offer a good site for a Trump Casino in Hong Kong. Trump wants Mexico to do more on drug trafficking, Mexico may impose some new regulations that effect the Trump property in Baja. When the Trump Organization’s interests diverge from the U.S. interests, whom will Trump favor? The risk that Trump will sacrifice the U.S. to favor his company is simply to large for any reasonable person to take.

In the “good old day” (pre-2004), the norm was that the major party candidates accepted public financing. That changed in 2004, when several candidates in the Democratic Primary decided that they could raise enough on their own without accepting the partial matching funds (and the attached per state limits on spending). (The per state limits are probably the most arbitrary and dysfunctional part of the current rules on matching funds.) In 2012, both major party nominees opted against taking public financing for the general election.

This year, Donald Trump just might be taking a very long and hard look at accepting public financing. There are several reasons why public financing might look very good to the Donald. First, he has proven completely unable to raise funds on his own. In slightly over twelve months, he raised a total of $17 million (tossing in $45 million of his own money for the primary). Given that the public funding for the general election is $96 million, it’s in his personal financial interest to let you and I pay for his campaign. Second, the only way that he has any shot at raising that type of money on his own is to beg for money from lobbyists — which would contradict the image that he is trying to present. Third, in the Citizens United era. it is easy to farm out the campaign tasks. Given Trump’s distaste for polling, data analysis and field operations, it is very conceivable that the official campaign will just dump those responsibilities on the Republican National Committee (which would be exempt form the spending limit) and just use the campaign for ads and appearances (and a skeleton staff.) Even if later in the race, the campaign decides that it needs to spend more on ads, it can just farm that out to a Super PAC. Finally, there is Trump’s perception that, with his celebrity status. he doesn’t really need to do much in terms of campaigning — a “run and they will vote for you” type of delusion.

Now, I haven’t heard on the internet or the news suggesting that Trump is planning to take public financing for the general election. I am just saying that — with public funding available immediately after the convention and the Clinton campaign getting a free-ride on ads in swing states due to Trump’s campaign being broke — you would think somebody in that campaign is running the numbers.

The Supreme Court ended the argument portion of its term this week. After taking its last two week recess, the remainder of this term will be about attempting to issue opinions in the argued cases. The question remains how many of these cases will end up in 4-4 split or be rescheduled for reargument in 2017. Both this week’s one opinion and the last argument of the term had a strong First Amendment component.

Elections matter. In 2012, President Obama won the right to nominate judges and justices to fill vacancies on the bench — both in the lower federal courts and on the Supreme Court. In 2010 and 2014, the Republicans won the right to vote down any unacceptable nominees.

Earlier this morning, Justice Antonin Scalia passed away. In 1986, President Reagan nominated Justice Scalia to fill the Associate Justice spot that had belonged to Justice Rehnquist when President Reagan nominated Justice Rehnquist to be the new Chief Justice. For most of his career, Justice Scalia was the intellectual leader of the ultra-conservative wing of the Supreme Court. This vacancy — if filled during this Administration — would be the first time since 1970 that a majority of the Justices on the Supreme Court will be Democratic appointees. This vacancy will have both short term and long term impacts on politics.

The immediate short term is that — except for a handful of issues — Justice Scalia is generally a solid vote for the “conservative” side of legal issues. Those cases that would have been a 5-4 split in favor of the conservative side will now be a 4-4 split. On a 4-4 split, there is no decision and the lower court opinion stands (unless the Supreme Court opts to reschedule the case for the following term). Additionally, as it takes a favorable vote from four justices before the Supreme Court grants full briefing and argument on a case, the tradition when there is a vacancy is to hold cases that have three votes for full review. In particular, the continued extension of “free speech” rights to make it easier for conservatives to raise money and harder for liberals to raise moneys is temporarily on hold. The current opt-out provisions for the contraceptive mandate will probably also survive. Any decision on the immigration policy will either favor the White House or leave it back to the lower courts to decide on the merits (the current issue before the Supreme Court only concerns a temporary injunction pending a full trial).Continue Reading...

We are coming up on the November debates — the Republicans on Fox Business Channel, the Democrats on CBS. The sheer size of the Republican field (and the impossibility of being fair to all of the candidates) continues to drive everybody mad. Arbitrary criteria lead to candidates being shuffled to the “JV” debate or excluded all together; and the shortness of time leads to candidates being upset about not getting a chance to make their points. On the other hand, with only five candidates originally and three candidates left now, the time issues are not that pressing on the Democratic side.

For the upcoming Republican debates, three candidates have been excluded from the JV debates (Lindsay Graham, George Pataki and Jim Gilmore). Chris Christie, Mike Huckabee, Bobby Jindal, and Rick Santorum will take part in the JV debate. The main event will feature Donald Trump, Ben Carson, Marco Rubio, Ted Cruz, Jeb Bush, Carly Fiorina, John Kasich, and Rand Paul.

The number of Republicans running creates a potential paradox in the normal money primary. At this point in the campaign, trailing candidates routinely find themselves in a catch-22 — they need more funds to become competitive but they need to become competitive to get more funds. However, putting aside Carson and Trump (as most of the money folks seem to think that both will collapse), several of the candidates can point to a poll showing them within the margin of error of third place in at least one early state. However, it is highly unlikely that 15 candidates will make it to Iowa. I would not be surprised if Senator Graham decides that with Rand Paul not being a serious contender that he no longer is needed to assure that the Republican field takes an aggressive stand on foreign policy. If Gilmore and Pataki were actually running expensive campaigns, I would not be surprised for them to call it a day soon. Since they aren’t, they might just stick around. Santorum, Huckabee, and Jindal are all competing for the same slot — currently occupied by Ben Carson. At some point, the lack of funds will force one or all of them to drop out. The November JV debate may be the last chance for one of these three to become the alternative to Carson.Continue Reading...

As summer turns to fall, the new Supreme Court term is just two weeks away. While (with one notable exception), the Supreme Court rarely decides elections, Supreme Court decisions can alter the rules for elections and often become an issue in the campaign. Before leaving at the end of June, the Supreme Court had already accepted a significant number of cases for this term. Normally, they accept enough cases to fill the fall (October, November, and December) argument sessions with a handful left over for January. This time (while they have not yet officially published the December argument list), there are more argument slots available than cases. This post will focus on the cases already accepted. These cases will be heard between now and mid-December, with most of them likely to be decided around the time that the major presidential primaries are taking place. The next post will look at cases that might be accepted for the spring arguments.

October is looking very much like criminal procedure month (with two days set aside for death penalty cases and a juvenile homicide case). On other cases, there is an interesting case from my neck of the woods (Hawkins v. Community Bank of Raymore) involving the Equal Credit Opportunity Act. Among the provisions of the Act, the Act forbids banks from discriminating based on marital status. In this case, the bank (as a condition of a loan to a small business) required the owners’ wives to personally guarantee the loans. When the business could not repay the loan, the bank sued the wives who in turn claim that requiring them to guarantee the loan was discrimination based on marital status.

Another potentially interesting case from October (Campbell-Ewald Company v. Gomes) involves class-actions. In a class-action, one individual seeks to purse claims on behalf of a group of individuals who have similar claims. Part of the process requires the trial court to hold a hearing to determine whether the individual is sufficiently similar to the other members of the group (among other factors) in order to determine whether to allow the case to proceed as a class-action. In this case, the defendant offered to pay the plaintiff’s claim in full before the hearing. The primary issue is whether, under those circumstances, the class-action can proceed or does the settlement offer effectively eliminate the plaintiff.Continue Reading...

Right now, people are looking at polls, but there is another issue to be considered: the money. We know that there are regular contributions, with legal limits, and dark money, with no limits.

If you want to see how much money is being contributed to campaigns, click this link, and download Greenhouse. Then, on any website, when you see a candidate’s name, you’ll see how much money they are taking in by cycle. It’s AWESOME! You’re welcome.